How do I navigate complex exit options?

The Startup Help Desk

In this episode we answer questions about complex exit options. While we all hope for a bit exit, startups more often face complex and difficult exit options including low sale prices, mergers and wind downs. We are here to help! In this episode we answer questions including:

• What happens if my investors want to sell but I don't?
• Is a merger ever a good idea?
• How do I know it's time to shut down my company?

All of these questions were submitted by listeners just like you. You can submit questions for us to answer on our website TheStartupHelpdesk.com or on X/Twitter @thestartuphd - we'd love to hear from you!
Reminder: this is not legal advice or investment advice.
Q1: What happens if my investors want to sell but I don't?
In most cases, it’s the primary founder’s decision. Facebook was pushed to sell to Yahoo! but refused. However, there are often consequences for refusing to accept an acquisition offer. Those consequences include executive resignations, investors deciding to no longer fund subsequent rounds, and a hostile board.
If you are OK with those consequences, you are ready to keep pushing.
Much of this decision rests on how much conviction you have about the next stage of growth for your startup. How much runway remains? Is your startup growing? Do you have any signal that suggests you are reaching an inflection point? Is your team uniquely positioned to succeed with this opportunity vs. pursuing a new opportunity? These are the types of questions to answer when deciding to accept or turn down an acquisition offer of this sort.
Q2: Is a merger ever a good idea?
Mergers are very risky. There are integration costs, culture clashes, and a mix of incentives. If you and your competitor are the two clear leaders, it can mean 1+1=10. However, if you are just two players in a sea of competition, pursuing a merger may distract you.
A merger may make the most sense as a last resort. If you cannot sell your startup and are going out of business, a merger can be the life raft. A merger can save some of the employees’ jobs and investor stakes. This last resort is worth a shot, but expect a low probability of a good outcome.
Finally, if you decide to pursue a merger, expect the merger integration to take at least a year. Manage your risk and plan accordingly!
Q3: How do I know it's time to shut down my company?
If you are out of cash, it’s an easy decision. If not, it’s a really hard decision with no clear answer. Some people waste years of their life on a dying company, while others find a breakthrough at the end and become a big win.
Is there something else you would rather do with your time? Are you and your team members uniquely positioned to pursue another opportunity instead?
While there is no definitive process for this decision, consider the following: give yourself a clear timeline with objective goals. These goals should likely focus on demand, customers landed, or revenue received. With this data in hand: do you have enough evidence to justify working on this further vs. shutting down so that you can allocate your time elsewhere? This comes down to opportunity cost, the realities of how much cash remains for your startup, and how your gut evaluates your options.